The Best Ways To Boost Your Credit Score

Because of the way credit scores are calculated, some actions
you take will affect your credit score better than others In
general, paying your bills on time and meeting your financial
responsibilities will boost your score the most Owing a
reasonable amount of money and being able to repay it will show
lenders that you take your finances seriously and pose little
threat of lost money There are a few tips that, more than any
other, will boost your credit score the most:
Tip 1: Pay your bills on time
One of the best ways to improve your credit score is simply to
pay your bills on time This is absurdly simple but it works
very well, because nothing shows lenders that you take debts
seriously as much as a history of paying promptly Every lender
wants to be paid in full and on time
If you pay all your bills on time then the odds are good that
you will make the payments on a new debt on time, too, and that
is certainly something every lender wants to see Experts think
that up to 35% of your credit score is based on your paying of
bills on time, so this simple step is one of the easiest ways to
boost your credit score
Paying your bills on time also ensures that you don’t get hit
with late fees and other financial penalties that make paying
your bills off harder Paying your bills in a timely way makes
it easier to keep making payments on time
Of course, if you have had problems making your payments on time
in the past, your current credit score will reflect this It
will take a number of months of repaying your bills on time to
improve your credit score again, but the effort will be well
worth it when your credit risk rating rebounds!
Tip 2: Avoid excessive credit
If you have many lines of credit or several huge debts, you make
a worse credit risk because you are close to “overextending your
credit” This simply means that you may be taking on more credit
than you can comfortably pay off Even if you are making
payments regularly now on existing bills, lenders know that you
will have a harder time paying off your bills if your debt load
grows too much
The higher your debts the greater your monthly debt payments and
so the higher the risk that you will eventually be able to repay
your debts Plus, statistical studies have shown that those with
high debt loads have the hardest time financially when faced
with a crisis such as a divorce, unemployment, or sudden
illness
Lenders (and credit bureaus who calculate your credit score)
know that the more debt you have the greater problems you will
have in case you do run into a life crisis
In order to have a great credit score, avoid taking out
excessive credit You should stick to one or two credit cards
and one or two other major debts (car loan, mortgage) in order
to have the best credit rating Do not apply for every new
credit line or credit card “just in case” Borrow only when you
need it and make sure to make payments on your debts on time
You should also know that taking out lots of new credit accounts
in a relatively short period of time will cause your credit
score to nosedive because it will look as though you are being
financially irresponsible
Tip 3: Pay Down Your Debts
If you have a lot of debt, your credit score will suffer Paying
down your debts to a minimum will help elevate your credit
score For example, if you have a $1000 limit on your credit
card and you regularly carry a balance of $900, you will be a
less attractive credit risk to lenders than someone who has the
same credit card but carries a smaller balance of $100 or so If
you are serious about improving your credit score, then start
with the largest debt you have and start paying it down so that
you are using a less large percentage of your credit total
In general, try to make sure that you use no more than 50% of
your credit That means that if your credit card has a limit of
$5000, make sure that you pay it down to at least $2500 and work
at carrying no larger balance If possible, reduce the debt even
more If you can pay off your credit card in full each month,
that is even better What counts here is what percentage of your
total credit limit you are using – the lower the better
Tip 4: Have a range of credit types
The types of credit you have are a factor in calculating your
credit score In general, lenders like to see that you are able
to handle a range of credit types well Having some form of
personal credit – such as credit cards – and some larger types
of credit – such as a mortgage or auto loan – and paying them
off regularly is better than having only one type of credit

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